When it comes to staffing senior living communities and post-acute care facilities, the employment model matters for compliance, quality, stability, and long-term risk. Below, we compare 1099 independent contractor staffing with W-2 employee staffing and explain why many facilities are shifting toward W-2 or agency-based W-2 staffing.
1099 (Independent Contractor): Workers are paid as contractors, not employees. They manage their own taxes (self-employment tax), insurance, licensure costs, scheduling, and sometimes travel or liability insurance. Facilities hire them on a per diem, per-shift, or assignment basis.
W-2 (Employee or Agency-employed Staff): Workers are classified as employees. The agency or employer handles payroll taxes, withholdings, workers’ compensation, unemployment insurance, and often provides benefits such as payroll tax matching, liability/professional insurance, and consistent oversight.
In a W-2 agency model, the staffing firm manages compliance, credentialing, scheduling, and standards and delivers staff under employment status that meets labor and regulatory requirements.
On paper, 1099 can appear to reduce administrative burden for the facility by paying per shift rather than managing full payroll, benefits, and long-term employment overhead.
For some clinicians, 1099 offers flexibility to work part time or choose when and where they work.
Legal and Compliance Risk
Higher True Cost and Hidden Liabilities
Inconsistent Care and Staff Turnover
Administrative & Tax Burdens for Contractors — Hidden Costs
With the NLRB’s 2023 final rule on joint employer status, W-2 staffing reduces the risk that a facility will be legally deemed a co employer, which can carry significant liability.
W-2 staffing firms typically manage background checks, licensure verification, compliance training, and ongoing employee oversight. This leads to consistent standards, stronger alignment with facility protocols, and greater reliability.
This structure supports higher quality care, more predictable staffing, and reduced risk of errors or protocol breaches.
W-2 employment, which includes benefits, regular pay, liability coverage, and professional oversight, tends to result in higher engagement, lower turnover, and stronger commitment to the facility. This is especially important in senior living and post-acute care environments.
Instead of paying higher per-shift premiums or risking back-pay, audits, or legal exposure, W-2 staffing gives facilities better predictability of labor costs and safer compliance.
Consistent, trained, and committed staff support continuity of care, strengthen relationships with residents, and protect facility reputation. These outcomes are difficult to achieve with transient or inconsistent 1099 staffing models.
The 2023 final rule from the NLRB expanded what constitutes a “joint-employer.” That means even staffing agencies using 1099 models may expose facilities to legal liability if the facility exerts control over schedules, protocols, or supervision.
Regulatory and enforcement scrutiny over misclassification continues to intensify. Data from 2025 estimates that misclassifying workers as 1099 instead of W-2 remains one of the most costly compliance errors for both employers and workers.
Healthcare staffing firms and agencies are increasingly promoting W-2 on-demand staffing models as safer and more stable alternatives, particularly for long term or repeat staffing needs.
Is the staffing need ongoing or a one-time fill? Ongoing needs typically benefit from W-2 or agency staffing.
Can contractors meet all compliance, credentialing, and liability requirements, including workers’ compensation, insurance, license verification, supervision, and training?
Do we want continuity, cultural alignment, and long-term investment in our care standards?
Are we willing to risk legal exposure, audits, back pay, or penalties in exchange for short term flexibility?
If your answers lean toward long-term stability and compliance rather than short term convenience, a W-2 staffing approach is typically the stronger choice.
Using 1099 independent contractors may seem attractive for short-term flexibility. However, in today’s regulatory and operational environment, especially in senior living and post-acute care, the risks tied to compliance, turnover, quality, and liability often outweigh the benefits.
For organizations focused on resident care, staff consistency, and long-term stability heading into 2026, W-2 staffing, particularly through experienced staffing agencies, offers a more reliable and compliant solution.
If you are evaluating your staffing strategy for the year ahead, consider both the immediate costs and the hidden liabilities associated with 1099 staffing and whether a transition to W-2 staffing could better support quality, retention, and compliance.